What is the basis for determining duty rates for imports subject to proportional duty in Vietnam?

What is the definition of proportional duty in Vietnam?

According to Article 4 of the Law on Export and Import Duties 2016:

Definitions

For the purpose of this Law, the terms below are construed as follows:

1. Free trade zone means an economic zone located within Vietnam’s territory, established in accordance with law, having a definite geographic boundary, and separated from the outer area by hard fences in order to facilitate customs inspection and customs control by the customs authority and relevant agencies with regard to exports and imports, inbound and outbound vehicles and passengers; the trading relationship between the free trade zone and the outside area is consider exportation and importation.

2. Mixed duty means the total amount of proportional tax and fixed tax.

3. Proportional duty means tax expressed as a percentage of the taxable value of exports and imports.

4. Fixed duty means a fixed amount of tax imposed upon a unit of exports and imports.

5. Anti-dumping duty means an additional import duty imposed upon dumped imports in Vietnam that cause or threaten to cause considerable damage to domestic manufacturing or prevents the formation of domestic manufacturing.

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Thus, the proportional duty means tax expressed as a percentage of the taxable value of exports and imports.

What is the basis for determining duty rates for imports subject to proportional duty in Vietnam? (Image from the Internet)

What is the basis for determining duty rates for imports subject to proportional duty in Vietnam?

According to Article 5 of the Law on Export and Import Duties 2016 on the basis for determining duty rates for imports subject to proportional duty in Vietnam:

- The amount of export or import duty is determined according to the taxable value and duty rate (%) of each article at the time of tax calculation.

- Import duty rates include preferential rates, special preferential rates, and ordinary rates as follows:

+ Preferential rates apply to imports originated in any country or group of countries or territories that accord Vietnam most-favored nation treatment; goods that are imported from a free trade zone to the domestic market and originating in a country or group of countries or territories that accord Vietnam most-favored nation treatment;

+ Special preferential rates apply to imports originated in any country or group of countries or territories that have an agreement on special preferential import duties with Vietnam; goods that are imported from a free trade zone to the domestic market and originating in a country or group of countries or territories that have an agreement on special preferential import duties with Vietnam;

+ Ordinary rates apply to imports other than those mentioned in Point a and Point b of Article 5 of the Law on Export and Import Duties 2016. The ordinary rate is 150% of the preferential rate applied to the corresponding article. In case preferential rate is 0%, the Prime Minister shall decide the application of ordinary rate pursuant to Article 10 of the Law on Export and Import Duties 2016.

When is the time for calculating import duty in  Vietnam?

According to Article 8 of the Law on Export and Import Duties 2016:

Taxable value and time for tax calculation

1. The taxable value is the customs value prescribed by the Law on Customs.

2. The time for calculating export or import duty is the time of registration of the customs declaration.

In case of exports or imports that are not subject to taxation, exempt from export or import duties, or applying in-quota duty rates or fixed duty but then the eligibility for tax exemption or in-quota duties is changed as prescribed by law, the time for tax calculation is the time of registration of the new customs declaration.

The time of registration of the customs declaration shall comply with regulations of law on customs.

Thus, the point of time for calculating import duty is the time of registering the customs declaration.

In case of exports or imports that are not subject to taxation, exempt from export or import duties, or applying in-quota duty rates or fixed duty but then the eligibility for tax exemption or in-quota duties is changed as prescribed by law, the time for tax calculation is the time of registration of the new customs declaration.